American Software Inc (AMSWA) Reports Mixed Q2 Fiscal 2024 Results Amid Strategic Shifts
Subscription fees increased by 8% year-over-year in Q2, reaching $13.4 million.
Total revenues for Q2 decreased by 6% year-over-year, with a notable decline in services and maintenance fee revenue.
Adjusted EBITDA margin was 16% of revenue from continuing operations in Q2.
AMSWA continues to strengthen its focus on supply chain innovation with strategic acquisitions and divestitures.
On November 16, 2023, American Software Inc (NASDAQ:AMSWA) released its 8-K filing, detailing the financial results for the second quarter of fiscal year 2024. The company reported an 8% increase in subscription fees, which amounted to $13.4 million for the quarter ended October 31, 2023. However, total revenues saw a 6% decrease to $25.7 million compared to the same period last year, primarily due to a decline in services and maintenance fee revenue.
Financial Performance Overview
AMSWA's recurring revenue streams, which include Maintenance and Cloud Subscriptions, were $21.5 million, or 84% of total revenues for the quarter, up from 78% in the prior year. Despite this increase in recurring revenue's proportion, maintenance revenues fell by 8% to $8.1 million, and professional services and other revenues saw a significant 26% decrease to $4.0 million. The decline in professional services and other revenues was mainly attributed to lower project work and the outsourcing of some services to partners.
Operating earnings for the quarter were $1.2 million, a substantial decrease from $2.6 million in the same period last year. GAAP net earnings from continuing operations also declined to $0.6 million, or $0.02 per fully diluted share, compared to $1.9 million, or $0.06 per fully diluted share, for the same period last year. Adjusted net earnings from continuing operations, which exclude non-cash stock-based compensation expense and amortization of acquisition-related intangibles, were $2.9 million, or $0.08 per fully diluted share, a slight decrease from $3.2 million, or $0.09 per fully diluted share, for the same period last year.
Strategic Developments and Outlook
AMSWA has been actively transforming its business, as highlighted by the acquisition of Garvis B.V., a SaaS startup specializing in AI-native demand forecasting. This acquisition is expected to enhance AMSWA's supply chain planning capabilities. Additionally, the company divested its information technology consulting firm, The Proven Method, and implemented a stock buyback program, purchasing 430,576 shares at an average price of $11.20 per share.
For fiscal year 2024, AMSWA has updated its financial outlook from continuing operations, expecting total revenues of $100.0 million to $104.0 million, with adjusted EBITDA of $14.5 million to $16.0 million.
Balance Sheet and Cash Flow Highlights
The company's balance sheet remains robust, with cash and investments totaling approximately $83.9 million. AMSWA continued to return value to shareholders, paying dividends of approximately $3.8 million during the quarter. Net cash provided by operating activities of continuing operations was $6.4 million for the six months ended October 31, 2023.
In conclusion, while AMSWA experienced growth in subscription fees, the overall revenue decline and lower earnings reflect the challenges of transitioning service models and strategic realignments. The company's focus on supply chain innovation and AI-driven solutions positions it for future growth in a rapidly evolving industry.
For more detailed information, investors and stakeholders are encouraged to review the full financial statements and management's commentary in the 8-K filing.
Contacts for financial information and press inquiries can be directed to Vincent C. Klinges, Chief Financial Officer of American Software, Inc., at (404) 264-5477.
Explore the complete 8-K earnings release (here) from American Software Inc for further details.
This article first appeared on GuruFocus.
